A small team may have just cracked one of the big obstacles facing smart glasses

A cosmetic mock-up made by Avegant showing an AR headset.Vimeo/Avegant

A small startup in California may have just beat the billion-dollar startup Magic Leap to the first public demonstration of technology that integrates graphics with the real world with depth, so your eyes can focus on virtual objects at different distances.

Avegant had been known for Glyph, a pricey pair of headphones that could turn into a personal movie theater thanks to hidden screens in its headband.

But on Thursday, the startup broke into the augmented-reality world with a public demonstration and video of its new optics prototype. AR is a technology currently trendy with techies that displays digital objects and other information in the real world. The endgame of AR — or mixed reality, as some in the industry call it — is a pair of consumer smart glasses.

Avegant is claiming what would be a breakthrough in AR optics, one of the core technologies that is limiting AR's market potential at the moment. Avegant says its prototype displays digital images at different focal lengths, more like the real world, which would make AR experiences more compelling and immersive.

That's very similar to what Magic Leap says its still unreleased headset, which hasn't been demoed publicly, can do.

And here's what the current optics prototype looks like. Note that it's wired to a PC — this isn't portable yet.

And here's what it should be able to do, according to Avegant's renders.

Here's what makes Avegant's announcement special: It says it has optics that can display virtual objects at different focal lengths, like the real world. See the Mars rover in the foreground and how the planet in the back is out of focus?

"In the solar system demo, I was able to observe a satellite orbiting an Earth no larger than a bocce ball and identify the Big Red Spot on Jupiter. Avegant constructed its demo to show off how these objects could exist at different focal lengths in a fixed environment — in this case a converted conference room at the company's Belmont, California, office. So I was able to stand behind the sun and squint until the star went out of focus in one corner of my vision and a virtual Saturn and its rings became crystal clear in the distance."

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Avegant says its optics technology lets the user decide what to focus on, such as Mars in the background.

But these are just renders. This is what it actually looks like through the headset.

This kind of technology is called "light fields" by Avegant.

Avegant

Here's how Ed Tang, Avegant's CTO, explained it to Business Insider:

"Light-field displays are able to display multiple focal planes simultaneously from near distances to infinity. This allows for a very realistic display of images and objects simultaneously at any distance in a scene. Mixed-reality displays in the market today are fixed single-focal-plane displays, which limit the area where images can be displayed and is particularly challenging in the near-field distance, where most interactions occur in MR."

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There's no timeline yet, and Avegant is demonstrating only one aspect of AR — equally important are the sensors and cameras that allow a headset to know where it is in a room. Those aren't yet built into the optics prototype but should be part of the product when it comes to market.

Avegant

"The cosmetic mock-up shown in the videos is where we're headed, with inside-out tracking and a small, light form factor," a representative told Business Insider.